Trump Presidency Brings Business Uncertainty

It’s anyone’s guess how U.S. President Donald Trump will govern, and that’s a serious challenge for Canadian businesses.

While much of Trump’s controversial campaign focused on issues not relevant to most Canadians, the single biggest theme in President Trump’s quest to “make America great again” focused on trade policy.

Trump drew support from a vast swath of Americans who have seen their lives, or the lives of friends and loved ones, disrupted by changes in the global supply chain. Candidate Trump told voters that the significant loss of manufacturing jobs to Asia and Mexico was the result of lopsided international trade agreements negotiated by corrupt, incompetent elites.

Of all of Trump’s campaign bluster, it’s his promise to make better trade deals for the United States that stands out the most.

Trump opposes the Trans-Pacific Partnership (TPP) – a deal with Canada and 10 other Asia-Pacific countries that would dramatic reduce damaging trade tariffs on Canadian exports to some of the world’s most important markets.

More importantly for Canadians is the status of the North American Free Trade Agreement (NAFTA). The U.S. is Canada’s biggest market for exports and NAFTA has been good to Canadian industries. Canada’s lumber sector has long been fighting U.S. tariffs and accusations of subsidization and dumping. A recent U.S. Trade Commission finding that Canadian lumber products “materially injured” by Canadian imports sold at “less than fair value” has already set the stage for imposition of preliminary duties. Expect these negotiations and disputes to get a lot tougher under the Trump administration.

Canadian livestock exports to the U.S. are also on Trump’s radar. After a hard-fought battle by Mexico and Canada to remove requirements for country-of-origin labels on imported livestock and meat products, those protectionist rules may be re-visited.

If you think his protectionist rhetoric was all talk, Trump’s key trade appointments clearly show he means business. Trump chose Robert Lighthizer as U.S. trade representative – a former Reagan-era deputy trade representative renowned for promoting protectionist trade policies.

Of interest to all Canadian exporters to the U.S. is the possibility of the Trump administration imposing a so-called “border adjustment tax plan” that would slap a tax on products imported into the United States. The border tax has been discussed by Trump and some of his advisors to address what they see as unfair tax disadvantages confronting U.S.-based companies.

While Trump’s views on trade are a serious concern for several Canadian sectors, it’s important to remember that Canada isn’t Trump’s target. President Trump sees China and, to a lesser extent, Mexico as the real threats to U.S. interests.

Regardless, Canadian trade negotiators face a much different opponent in the Trump administration than they have seen since Ronald Reagan. They better be ready to negotiate hard for Canadian interests against a U.S. government determined to make better trade deals for American firms.

Alberta Enterprise Group is a member-based, non-profit business advocacy organization. AEG members employ more than 150,000 Canadians in all sectors of the economy.